U.S. industry could be hit after tire tariff ruling, law firm warns

Updated 2017-01-25 10:02:55China Daily

Trade protectionism could hurt the vitality of the U.S. tire market, after the country made a final ruling that tires from China were dumped and subsidized.

If high tariffs strip Chinese tire manufactures of their ability to export their products to the U.S. affordably, the average tire prices in the market might rise and U.S. consumers could have limited choices, said Pu Lingchen, partner of Zhong Lun Law Firm, on Tuesday.

Trade remedies cannot address the fundamental issues of any industry, but provide only a "short-term buffer", said Pu.

"The key solution is to improve the industry structure, enhancing technology and production capacity."

According to a statement released by U.S. Commerce Department on Monday, Chinese tire manufacturers, such as Prinx Chengshan (Shandong) Tire Co Ltd, Double Coin Holdings Ltd and Guizhou Tire Co Ltd, are facing high anti-dumping and anti-subsidy rates.

It said the final anti-dumping margins range from 9 percent to 22.57 percent, and anti-subsidy rates are from 38.61 percent to 65.46 percent.

The case is still under review by the U.S. International Trade Commission, which makes determinations in proceedings involving imports claimed to injure a U.S. domestic industry. It is scheduled to release the conclusion in March.

Prinx, Double Coin and Guizhou Tire did not respond to interview inquiries from China Daily.

Since last year, the Chinese tire industry has been facing severe tests, as the U.S. imposed both anti-dumping and anti-subsidy investigations against major companies.

The China Rubber Industry Association finds that its main tiremaker members' output increased 4 percent year-on-year between January and August 2016, while their export volume and value, respectively, declined 0.84 percent and 7.99 percent from a year earlier.

As for the future, it remains uncertain whether or not the U.S. new administration will add tariffs to other Chinese exports since such a policy could "definitely harm workers and entrepreneurs in both countries", said Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation.

In 2016, China faced 119 trade remedy investigations, a historic high, and the value involved increased by 76 percent year-on-year to .34 billion, data from the Ministry of Commerce showed.